Many advisors are testing different
The survey, which received 270 responses from professionals in wealth management, found that 43% said AI tools will play an "extremely" to "very" important role in their firm's efforts to capture new clients and/or retain children inheriting wealth from existing clients. Another 33% said they feel their firm currently views generative AI and its potential contribution as a "critical" or "high" priority.
The results were released during
"There is a real fear of missing out when it comes to AI. The market, the financial services industry and the media have brought AI center stage. Even my barber is talking about how AI can change his business," said Kevin Knull, president of TaxStatus, an IRS account monitoring platform. "If only 33% of wealth professionals are thinking this should be a high priority, my real question is this – 'What is the other 67% thinking?' AI will absolutely change a significant part of our business."
Conversely, more than half (55%) said AI's role is "somewhat important" to "not very important."
Part of advisors' mixed feelings toward AI's potential — specifically with client growth — could be because most of the generative AI tools, such as large language models like ChatGPT, are still in the early stages of adoption. This survey, conducted online in July 2024, received 270 responses from professionals largely from RIAs, broker-dealers and a hybrid of both.
Only one-third of respondents said they feel their firms currently view generative AI and its potential contributions as high-priority.
"In an industry that thrives on trust, relationship-building, and personalized advice, it's understandable that firms are taking a measured approach," said Ritik Malhotra, founder and CEO at
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However, there are major roadblocks to faster AI adoption due to advisors not having the time or resources to learn the tools. They also don't always know which tools are best for their practices.
"The challenges that advisors have with prospecting for new clients and generating ROI from AI and other marketing activities are the same challenges people have in any business," said Robert Sofia, chairman and CEO at Snappy Kraken, which provides marketing technologies for the industry. "We always have an issue with time. We always have an issue choosing the right technology. We have to experiment with channels to figure out what to use, and that takes time."
When asked what the biggest obstacles are for advisors in marketing or prospecting new clients, nearly 40% of respondents said "finding the time to do it," next to "finding the right technology tools to help," at 37%.
"You have to dedicate time to your current activities, like taking care of your clients, maintaining your business, and doing what's been successful," Sofia said. "You also have to dedicate time to innovating."
Still, there is both internal and external pressures by firms to have advisors adopt AI tools. In particular, a quarter of respondents said they felt "significant" to "high" pressure from competitors.
Most of the competitive pressure is coming from larger firms that adopted AI early on thanks to their nature of having larger technology budgets and resources than smaller firms.
Powerhouses like Morgan Stanley and Merrill Wealth Management in recent years have been applying AI tools to help streamline advisor workflows which ideally boosts advisors' engagement with clients.
For example, this summer Merrill launched a scheduling app that allows clients to see their advisor's calendar and instantly book or change an appointment. The firm estimates it saves teams more than 75,000 hours per year by automating the back-and-forth down to roughly 2 minutes.
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And that's just scratching the AI surface. Morgan Stanley's Next Best Action platform has an AI-based recommendation engine to help its advisors more effectively communicate with clients.
"Through our Next Best Action platform, our financial advisors can identify the most relevant ideas to consider engaging each of their clients on, along with the ability to digitally engage large numbers of their clients in a highly customized and targeted way," said Andrea Zaretsky, chief marketing officer of Morgan Stanley Wealth Management and E-Trade. "The algorithms are able to capture the clients' and advisors' responses and interactions with these ideas and, in turn, work to improve the quality of these communications over time."
Morgan Stanely is also working with ChatGPT's parent, OpenAI, to further develop its in-house "Project Genome," which uses data analytics and AI to fine-tune personalized financial offerings and educational content to clients.
"We do view LLM's as a game changer and are thrilled with our exclusive partnership with OpenAI," Zaretsky said. "We are working on a content creation use case with OpenAI's LLM to help colleagues create both short- and long-term content specific to each channel more efficiently than ever before."
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As an industry, most firms are likely to adopt AI tools specifically for marketing to clients in the next year. When Financial Planning asked advisors what the expected pace of AI adoption at their firm is during the next 12 to 18 months to support client acquisition activities, 34% said they were either doing small-scale implementation or taking an incremental approach. Another 45% said they were still learning and collecting information on AI.
"All firms should feel pressure to educate themselves on AI capabilities. Firms should determine the best use case for AI to enable efficiencies in their business," said John O'Connell, founder and CEO of The Oasis Group, a tech consultant for advisory firms. "Children inheriting the wealth from existing clients will expect a firm to have an AI strategy and to be able to articulate that strategy in their sales process with the prospective client. … Once they have an awareness, they can develop a use case of how they want to attract new clients."
